How to Have a ‘Financially Positive’ College Experience

Posted on Sep 23, 2014 by Gwendy Donaker Brown


Research has consistently shown that, on average, the value of a bachelor’s degree is worth well upwards of $1M in additional lifetime earnings.  But as we know, averages don’t tell the whole story. For many people, the financial benefits of college don’t appear to outweigh the costs. In a recent Federal Reserve survey of people with outstanding education debt, they found that while 42% of respondents believe the lifetime financial benefits outweigh the costs, another 37% believe the costs are greater than the benefits. In other words, it really depends.


This raises two important questions. First, what are the factors that make it more likely for someone to have a ‘financially positive’ college experience? And second, what can we do to maximize those success factors?


To answer the first question, the financial benefit of college should = total lifetime earnings after college – total cost of college.  So we want to maximize total lifetime earnings by ensuring livable wages and encouraging students to go into higher-paid professions. And to minimize the total cost of college, students should attend the lowest cost institution that enables them to graduate on time and get a job in their field. Of course, reality is significantly more complex.


There are a few things we do know, however. Graduation rates vary widely by type of institution (higher for nonprofit and public 4 year colleges, lower in for-profit and public 2 year colleges) as well as by specific school. We can make sure our public dollars go towards schools with higher graduation rates, and support best practices at our community colleges to increase their graduation rates. And we scrutinize high-cost schools with poor graduation rates.


We also know that in order to minimize the costs of college you need to access all the grants and scholarships you may qualify for and if you need to supplement that funding with loans, start with subsidized (lower-cost) federal loans. To do this, students and their families need simple and accessible financial aid information and support, which many are not getting. Numerous studies have found that students and their families consistently estimate tuition costs to be two to three times higher than they actually are. 


At Opportunity Fund, we help individual students like Jaime and Rosita have a financially positive college experience through our College Savers program. We partner with high quality college prep programs to provide financial training to help students, and their families, budget for college and avoid high-cost debt while also offering individual support to navigate the complex financial aid process. And we provide matching grants that often make the difference between a student finishing their degree and adding to their debt burden, or even dropping out. We believe every young person deserves the chance to become a College Saver – and a college graduate able to benefit financially from their hard work.

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